THE ROAD TO $400k BITCOIN with Dan Tapiero

ግንቦት 23, 2020

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We'Ve never had anything like this something much much bigger than gold, it's, bigger than stocks and bonds, and all the assets it's bigger than everything, because it's a functioning living, breathing invention, hello and welcome back to Oakland bus spotlights with me. Leia the show where we speak to entrepreneurs, innovators and thought leaders in the cryptocurrency and blogging space joining us today is down to pero the founder of dtap capital and the co founder of gold, bullion international here's, also a 25 year global macro investor and finally took The plunge to enter the crypto space back in 2018 don't forget, let us know who you want us to interview next in the comment section below and if you enjoy the show and don't forget to hit the like button: Music, Music, dan, welcome to the show. How are you doing today, I'm doing well beautiful weather here in Greenwich Connecticut, just taking it easy good it's, all good good excited to have you because you're one of those people that come from the traditional and financial background and eventually for whatever reason which we'll get To decided to move into crypto or sort of dip, your toes in and so it's interesting and you are a very well accomplished macro investor. So can you explain what that is for us yeah? Absolutely I spent 25 years in the hedge fund business as a global macro hedge fund manager. ደግሞ, as a as an analyst in my in my early years, I worked with several of the you know: well known, fund managers.

What my first job really out out of school is with julian robertson, a tiger, and then i later ended up working with steve cohen. For ten years and then with Stan Druckenmiller Duchaine, and I would say the the analytical process that you come to learn in making decisions about where to invest that that process. The macro analytical process is one that you can use in managing a portfolio and in trading. But also in coming up with bigger ideas, and when I say macro, when you say a macro investor, the investor component is thinking about larger trends multi year trends that can take place, that aren't necessarily trading trends that you would for a port in a portfolio. So, just as an example, macro for in my framework is NaN usually refers to anything that's non equity, so currencies, bonds, emerging markets, commodities and coming up with a framework to figure out what's going to happen in the future. In some of these asset classes. Sort of the what a macro investor does – and I think that you know there really aren't too many of us around it's sort of an old school, an old school process and old school vesting, but it can be very. It can be very profitable. But you know the opportunities don't come around as much as they do. Let'S say in other areas, and so the opportunity in Bitcoin is one of those ones that comes around. You know once in a lifetime and it's, it perfectly fits.

You know within that macro framework, and you can see that some of the other guys my age in the space mike Novogratz and dan Moorhead. These are guys that have been in. You know who have come from this background was me who have been macro: investors and traders, their whole life and so there's, a natural natural ease to being able to understand what bitcoin is about, and last thing I'd say is that you know the Paul Tudor Jones Comment and and peace, which I think you've, probably read his investment letter last week I mean this is classic global macro he's more of a trader but of course, also one of the great investors of macro investors. Of all time. You can see how the framework we use to make decisions, I mean Bitcoin. It lends itself easy to understanding, Bitcoin and attending the opportunity. Okay, so essentially once you've been in that financial industry just for so long, it lends itself to, I guess, the evolution moving forward, but it's interesting, because a lot of you know gold people like Peter Schiff, for example – and you know just other macro investors – they don't – See the value in Bitcoin so tell me: where do you then see that value? And what is your Bitcoin macro perspective right? Well, that's, that's, a great question I think Peter Schiff is really just a gold. He is a gold business he's, a gold guy he's, a gold promoter.

I don't he's, not from he's, not from a global macro background he's, I would say global macro investors, so I put him. I put him to the side. Really I don't you know, i don't really see i I don't really. I don't really see him as involved in this specific debate. I'M. ይቅርታ, what was the you got me off track with? No sorry, no it's, okay it's. Just where do you see the value? The value in Bitcoin and the macro perspective yeah yeah, so there are a lot of ways to see to look at Bitcoin. I think that the traditional narrative that that is being pushed especially now on Twitter, which, as you know, is where is where the Bitcoin community lives is that it's, you know a better form of of money, it's digital gold, and I think that that's one and then People say well: the gold is valued at 10 trillion dollars and they're for Bitcoin, which is at 200 billion one day can be ten trillion because it's at least as good as gold. Well, I think that that's that's one way to frame the debate, but I don't really think it's accurate, because I think Bitcoin is a lot more than just a gold or is a lot more than just digital gold. You know gold, look. Gold has the longest track record of any asset in the world, and that has tremendous value. It has tremendous network effects that are very valuable it's.

It can be completely anonymous it's. It is easy to move around despite what people think it is easy to move, but the most important, maybe not the most important – is that it's super liquid and so institutional investors. You know, investors do have you know, let's, say you're, managing a trillion dollars of of assets and you need a hedge for I'll. Get to Bitcoin. Don'T worry don't worry. I want to get to the gold first, but I'm gon na get to the Bitcoin. You know if you have a trillion dollars in assets and you need a hedge under portfolio and you're sitting there with US Treasuries yielding 20 basis points, that's, not really a great hedge, and so I think that go the narrative of gold as the hedge for institutional Portfolios is going to become something that we're going to hear a lot about in the future. But if you take a trillion dollar portfolio and let's say it wants to have five to ten percent as a hedge to the assets in the portfolio. You know you're looking at 50 billion dollars or a hundred billion dollars that they need to have as a hedge now that's big, even for gold, but you can have a 30 40 billion dollar Gold position. Okay, you cannot have a 30 40 billion dollar Bitcoin position. So gold is very important right now in the traditional financial system and is growing now into that role. I know it's hard to think you know you think it's had 5000 years, how be growing a new role well, so gold, as that liquid hedge cannot be, is cannot be challenged by Bitcoin.

At this moment, however, Bitcoin you know, bitcoin is really a new invention. You know – and it does so many things, and it can do so many things and when you drill down into the nuts and bolts of what the invention is and what Satoshi created and the problem that he solved. The problem of trust and I've talked about this. You know security, truth machine. You know, we've never had anything like this. That could verify something to this degree, that that could provide this kind of security for all transactions of value now that's something much much bigger than gold: እሺ, it's bigger than stocks and bonds, and all the assets it's bigger than everything, because it's a it's, a functioning Living breathing invention, it's, not just an asset, so as an investor me owning Bitcoin as an asset in the portfolio, you know that's, wonderful. I think it can go up. You know it certainly can go up to three four hundred thousand for sure in the next. You know six, seven, eight to ten. You know five to ten years. I think we can see that kind of price, but that's still under selling it because it's still under selling it because that's Bitcoin as an asset, for you know for savers, for investors. When you start to try to figure out what is the value of the entire Bitcoin proposition, and then you start looking at how big can the digital asset ecosystem be right, not just on top of Bitcoin or a long bit call along with Bitcoin or maybe just Bitcoin in its entirety, blowing blowing up to something that's, all encompassing you know you can put.

You could put any kind of crazy number out there and I think that when you hear numbers from people like you know, the Winklevoss and some of the other guys coming out and saying oh Bitcoin – will eventually be a million dollars in twenty years or whatever's. It'S. Not impossible, it really isn't, there is a world. There is world where people begin to see how all encompassing it is. So you know the thing is this is that I don't really advise trading this. I think it for, as a trader myself for many years, it's an extremely difficult asset to trade if you're not doing it 247, but I've never seen an asset with this kind of asymmetry the risk reward of holding it is unbelievable. I think, if you say I'm going to put two to three percent of my portfolio in it and I'm gon na forget about it, you're, risking that two to three percent, and I think you can make you know. As I said, you know a twenty thirty bagger over the medium and long term, and I think at some point institutions will start to follow this line of reasoning, just like Paul Tudor Jones in his investment letter, which i think is a very simple clear way for Institutional investors to understand why they should have some Bitcoin in their portfolio and you know Paul's thought a lot about it and he is a great research team and I think it comes out in a very simple way.

I mean one of the biggest problems for Bitcoin to me. For me, I think, for the world generally, is that it's very difficult to explain and the language is very cold and there are many competing groups within the digital asset world who all have opinions about? What is optimal and I think that someone coming in from the outside gets very confused yeah. You know, let me let me just jump in then, because you have people now, fine, you have people like Warren Buffett right who referred to it as rat poison. So you say that one of the biggest issues and mass adoptions that is difficult to explain – and I totally understand that – and I think you know explaining it to the average person that you know they're just not going to get it but expanding it to the likes Of Warren Buffett, surely he does understand it, but yet he still thinks that it's rat poison. So, if Bitcoin is everything that you say that it is no, why don't these people see the value in it then yeah, I I don't think Warren Buffett has done the work on it and I don't think he's done reading. You know you can tell from how he talks about it that he hasn't, and I I think I mean look it's hard to criticize anyone of that stature. You know and that success, but I think this is something that really breaks down more along age.

Deep mark Asians, which is very strange, I think, as you said, I think the average person, as you call them under 35 or let's, say under 40 understands Bitcoin intuitively in a certain way and also is much more, is much more able. I think to do a deeper dive and to grasp it and someone who's 90 years old, and you know I think, as I've spoken to people about Bitcoin and this digital asset II, the system over the last you know year, but also longer, I find that it Breaks down really a age and what I mean is people over age 60. It there's a very small percent that really get it. They have this problem that it's it's, it's, abstract and it's money, that's, abstract, and they don't dig down to understand that the Satoshi white paper is the solution of a problem that we tried to figure out for hundreds of years. They don't they're, not they're, not doing that that that deeper dive, where, as someone under 30, I find like eighty percent of of people under thirty with even just a cursory kind of analysis intuitively get. Why it's the future, and so I think, there's a there's. A bell curve, distribution that goes along age and I don't think you'd go cuts across success or wealth or even investment acumen. I really don't know, and I think I think we've seen you know, even when we look at social media, big social media companies, I guess whenever there's something new right whenever somebody's built their fortune on something else and then something new comes into the space where people Don'T necessarily understand it, then naturally there's gon na be that threat there.

But I did speak to mark Yost go a couple of weeks ago and quite similar to yourself, and he gave me a Bitcoin prediction or 400k. He said that Bitcoin could eventually actually reach the maquis cap of gold. So where do you stand on this before? I agree completely, I think it's, just a matter of you know time. You know, can it you know, can it do it in five years I'm? Not so sure I mean, can it do it in ten years I think 400000 is is reasonable. You know, as I said, if you start to look at all the ways that you can add up what the value of Bitcoin is, you can get there. You can definitely get there, so I would agree with that. Yeah a nice compact yeah go for it. I know hon, I would say. Potentially it could be a lot more it's. Just that you know it already sounds crazy, telling people it's going to go from nine thousand to four hundred thousand, and I certainly in my 30 year career, have never seen an asset and never talked about an asset that could have that much upside I've, just I've. Never seen anything like that and so and I'm, not a VC early stage, tech investor, so I didn't see I didn't own Microsoft in 1988 or whatever it is. I didn't own eBay in 97, so it's, not my traditional style, because those aren't Mac they were.

It was a bigger macro development, but it's not macro in the way that this is so. I definitely can see those numbers and I would say even more yeah and we've spoken a lot about gold versus Bitcoin and you have been a gold guy and you know for the last 20 years. So if you had to choose right now, which would you rely on more – which would you want more right now yeah? Well, I think it's this one. I think you have to own both, I think Bitcoin will go up more in percentage terms. So if you are someone who said I have 1 and where would I put it for the next 10 years, I think you put that 1.00 in in Bitcoin it'll go up more but gold. You know, as I said, gold has, that liquidity a much greater liquidity and, if you're a larger investor, I think you have to have it in your portfolio just to make it easy. I think you have you know between 1 ና 3 in Bitcoin, and I think you have between 5 ና 10 in gold in your in your portfolio. Now we know going, I keep cutting you off, go on finish your senses. You got it cool, so we know that we know that you're, fine as well of aetherium and the by Nance coins. So tell us a little bit about this, and what are your thoughts? I guess generally on all coins then well fan is a bit what's that well, you know what I think they're super interesting.

I think by Nance is the fact that it's grown from zero to where it is today is incredible and cz is definitely. You know one of the leaders in the space and I think has has a powerful vision and I think if the area, ms, is super interesting, I don't you know I don't as a macro guy, they don't speak to me as much as Bitcoin, because I can Understand Bitcoin in my within my framework, and you know as scarce and as a store of value aetherium you know, has network effects it's been around for a while. The performance of aetherium since its beginning has been tremendous, but I don't really. You know I don't really understand the technology of it and I think that programmers really love etherium and there's definitely value there I'm. Just I just don't I'm, not sure I'm, not as comfortable myself. At this point right. No, I I think it's okay, like I think I think, it'll be okay. I just I don't have the confidence that I do, as you said, being a gold guy for so long there is overlap with Bitcoin that's, clear, aetherium it's a little different, but I think for people to dismiss. It is totally ridiculous and I you know in the future, I will be you know, and my team digging more. You know digging more into it, so there's there's definitely something there and I don't like mmm yeah, so that's that's that's my view on it.

Okay, great now, I want to talk about global markets as a whole, because it has been an incredibly unprecedented time and particularly the coronavirus. So, firstly, a lot of people say: markets crashed because back in March, when everything kicked off and with covert 19 but I've been hearing a lot of that, you know it's, not necessarily about covert 19. That was the tip of the iceberg. A lot more was actually going on underneath so talk to me about this yeah. I think there was a lot going underneath, and I did this interview with raoul pal unreal vision. A few months ago, actually, probably was in at the near the bottom in March, and I made this comment, I thought you know being a strong proponent proponent, then of gold and Bitcoin, even as it came down to that 5000 mark that look, the VIX had hit 90 and we had discounted something that I thought was a horrible scenario. You know so look things were were coming undone a little bit underneath because the Fed had started pulling back on its balance sheet too much and had raised rates too much in the previous two years and kovat exposed sort of a weak underbelly right. However, however, in the last two months – and I think I put something out on Twitter about this just a few days ago, if you add up the amount of stimulus that was done either through central bank liquidity injections or direct fiscal policy, they injected or are in The process of injecting twenty trillion dollars of liquidity, now twenty trillion dollars is the entire size of the US economy and so the nominal GDP.

So, to think about this mm, hmm, we had a crisis. I think there was a dramatic overreaction to shut down the global economy to zero that's another matter right, yeah regard it doesn't, it doesn't even matter now, because we're coming out of it, but regardless to respond to that in the a matter of weeks. Excuse me with that much stimulus that there's nothing that we've ever seen like that, and I would probably say that I doubt we'll see anything like that. Again I mean again, meaning you know. Maybe you know they'll that yeah. I think that to 20 trillion in two months, that's, and especially in percentage terms, is just gigantic, and so I you know as as bad as things may now and as bad as the unemployment data is, I think March was the worst of it, and people are Under estimating the amount of liquidity injected, but also oh, the ovid, that Cove has accelerated off to a more digital world, and I think this plays into the Bitcoin thesis and also into the the growth digital asset ecosystem, which is that, which is that you start to See, companies and areas in the economy develop are get let's say their business models get pushed forward as people are forced by kovat to start to interact in different ways or digital, and I think the companies that are stuck that don't have that functionality are getting hurt And you see this now, the Nasdaq is near the all time high and the Dow stocks are getting crushed, and I think that that can continue further foreseeable.

That may be a structural trend that's with us for a long time. I think that also benefits the narrative of Bitcoin, because look as you see the cash sorry, the the cash in the some of these economies is being removed right now, because of fear that it maybe is transferring kovat or whatever it is, but moved away from cash Was happening and so right, yeah right absolutely and I think it's definitely a common, a common perspective that I've been hearing and that you know we were moving forward to this digital world anyway, and this is just a catalyst. People now have been forced to innovate, but just looking forward, then, and quite briefly for us when do you think that the markets will actually recover? Can we see this anytime soon? Well, I think the markets have recovered the Nasdaq, as is back to you know, within 1 of its all time. High, I think credit is probably still needs to improve a little bit, but you have the Federal Reserve in buying John, the Federal Reserve has said. It'S going to you know, purchase an unlimited, be there with an unlimited liquidity. So I would argue that the markets are recovering it's, just that people are still very negative yeah. You know the the Merrill Lynch Bank of America Merrill Lynch fund managers survey out last week surveyed that only 10 of investors think we have a Veera covery and 70. I think still think we're we, you know we're going to be in a long recession.

I think those numbers are, I think, sentiment is too negative and the markets have run away so I'm Jen. Look, it doesn't mean the market can't correct again. I think the worst of it is behind us and I think the future is going to be a lot better, so leaving it on a positive note that Don thank you. So much it's been an absolute pleasure hearing your opinion on everything that's been going on I'm, particularly Bitcoin buses. Go. አመሰግናለሁ. አመሰግናለሁ.

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1:20 What does macro investing mean? 4:58 Why do you think bitcoin is valuable and what is your macro perspective on Bitcoin? 13:04 So I assume you disagree when Warren Buffet Calls Bitcoin rat poison and Jamie Dimon calls it a scam. Why do you think they believe that? 15:50 Give us your bitcoin predictions. 17:28 You are a gold guy for the last 20 years, and today if you had to choose between one, which one will you get as of now, gold or bitcoin? 18:33 What are some of the most interesting altcoins in your opinion? 20:33 Markets crashed back in March people when things kicked off with corona, but it seems that was more the tip of the iceberg. much more was responsible for what we saw? 25:06 When do you think we might see markets recover? Once the virus is cleared and life goes back to normal?

@Joe Lombardi I think it’s a delicate balance between letting your guest finish their thoughts and leading the interview in way which takes account of all the questions the interviewer wants to ask within a given time frame.